Home > Application, Economics > How Much is Blockbuster Worth?

How Much is Blockbuster Worth?

Blockbuster Video will always have a special place in my heart.  When a store opened up a few blocks from my childhood home, it was a big deal.  We were excited to walk over, browse the rows of VHS (and, for a short time, Beta) cassettes, and bring back a movie or two for three days / two nights.

Oh, how times have changed.  Once valued at nearly $5 billion (in 1996 dollars), Blockbuster stock is currently trading at around 17 cents a share, which means that the company is currently valued at around $37 million. 

So where is this $37 million in value?  The the company has dropped more than 100-fold in value, but $37 million stills seems like a lot of money.  Does Blockbuster have any significant revenue?  Do they have exclusive agreements with movie studios that have value?  Is the Blockbuster brand worth something?  Can they sell all their old VHS tapes to Panama?

Determining the value of a company is an interesting and complicated problem.  Facebook provides another good example of the complexities involved.  Recent reports suggest Facebook has a value between $10 and $20 billion, even though Facebook’s revenue is on the order of $1 billion.  How does one determine that all the non-revenue-related stuff (brand identity, user base, etc) is worth $9 billion?

One thing is for sure:  Netflix, currently valued at around $5 billion, is definitely 133 times more valuable than Blockbuster.  At least.

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  1. Nikita Zolotykh
    August 1, 2010 at 11:50 pm

    What’s even more interesting is why do people watch movies through Blockbuster or Netflix nowadays at all, when they can simply go online and watch them for free in a good quality (or even download them in HD quality for free, once again)? [well, besides less headache, of course]

  2. August 3, 2010 at 9:57 pm

    Probably a few reasons:

    -lack of knowledge of how to obtain movies online
    -lack of high-speed internet
    -ethical or practical objection to viewing such movies

    The guy who started Netflix tells an interesting story of how he got the business rolling. So what’s the next big business success in this industry?

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